Arrangements needed to address coop banks’ problems: High Court

The Bombay High Court on Tuesday posted for hearing on November 24 the petitions filed by district cooperative banks on demonetisation issue but said some arrangements will have to be made to address their grievances. 

The Mumbai, Solapur and Pune district central cooperative banks had approached the high court last week challenging the RBI circular of November 14, restricting them from exchanging or depositing old currency notes of Rs 500 and Rs 1,000 which were declared as illegal tender under the government’s demonetisation move on November 8.

Petitioners’ counsels Janak Dwarkadas, V M Thorat and Anil Sakhre informed the court today that because of the restriction, the banks and their account holders are suffering each day. “We are hard pressed and some workable solution needs to be arrived at,” Thorat said.

A division bench of justices A S Oka and M S Karnik after hearing this said, “Some arrangement needs to be made to address the issue.”  Additional Solicitor General Anil Singh today produced a copy of the transfer petition filed by the Union government in the Supreme Court seeking for all petitions on demonetisation filed in various high courts in the country to be either heard by the apex court itself or any one high court. 

He said the transfer petition has been posted for hearing on November 23 and sought for the petitions filed by cooperative banks to be posted for hearing on November 25. The court, however, said it would hear the petitions on November 24.

“We will see what happens in the apex court tomorrow and hear these petitions on November 24,” the judges said.

When the court sought to know the Reserve Bank’s response, senior counsel Venkatesh Dhond said the RBI would see what happens in Supreme Court tomorrow and then respond. The bench today noted that the petition filed by the Mumbai District Central Cooperative Bank is mentioned in the transfer petition filed by the Union government.

According to the cooperative banks, while the circular issued on November 8 after the demonetisation scheme was announced included these banks also and permitted them to accept and exchange old currency notes of Rs 500 and Rs 1,000, another circular issued by RBI on November 14 prohibited the cooperative banks from exchanging or depositing the old currency notes. 

“We have around 50 lakh account holders who have submitted cheques and cash after the scheme was announced. The cheques are cleared by the cooperative banks through the State Bank of India. But now because of the RBI circular of November 14, the SBI is refusing to clear our cheques or take the old currency notes from us,” Thorat had argued yesterday.

Dwarkadas had submitted that under section 26 (1) of the Reserve Bank of India Act, every bank note is considered as legal tender.